Magazine article The Spectator

A Way out of This Kafkaesque World

Magazine article The Spectator

A Way out of This Kafkaesque World

Article excerpt

The regulator of premium-rate telephone services, ICSTIC, is investigating television companies which dangle prizes before viewers' eyes and then make it extremely difficult to claim them. When it has finished with that, perhaps the watchdog might turn its attention to a similar scam: Gordon Brown's tax credits. In last month's Budget, the Chancellor held out the promise that 5.3 million people who will be left worse off by the abolition of the 10 pence starting rate for income tax will be able to offset some of their losses by claiming enhanced tax credits. What he didn't say was that tax credits are so fiendishly complicated that millions fail to claim the money to which they are entitled. In the case of Child Tax Credits, for example, two million of the seven million who could claim failed to do so -- a large number of them towards the bottom end of the income scale. No wonder the number of children living in poverty -- as defined by the government -- rose last year.

There is little hope that take-up of tax credits will improve. Indeed, last week a Treasury official admitted to the Commons treasury committee that no allowance has been made in the Budget for the possibility that more people might take up their entitlements. Can it be possible that Brown dreamed them up in order to give the impression of being generous without actually having to hand over the cash? No wonder the Treasury believes it can count on the poor not to claim, when there are so many horror stories of people caught up in the Kafkaesque world of tax credits.

One self-employed claimant was told that not only would she have to fill in a long form every year, but that she would have to contact her tax office every week to tell them the precise number of hours she had worked in the past seven days; drop below 30 hours, she was warned, and she would lose her money altogether. In another case a mother suddenly received a demand for £5,000 which HM Revenue and Customs claimed she had -- like thousands of others -- been overpaid by mistake. After many months arguing with her tax office that she would end up bankrupt, HMRC finally agreed to write off the money. Then bizarrely, like a dysfunctional cashpoint spewing tenners into the street, it sent her another £4,000 without explanation -- money which it would try to reclaim at a later date.

Needless to say, the system of tax credits is horrendously expensive to maintain. The administration of pension credit alone requires a staff of 18,000. …

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